Todays Big Stock: iRobot (NASDAQ:IRBT)

After dropping drastically over the past several weeks, the market has finally started to recover a bit over the last few days. For now, all looks better. However, as the market continues to move higher, I believe the rally could end up being short lived. If you missed out on entering short opportunities when the initial sell-off started, you may want to look to rallies for a 2nd chance to get short on a few stocks.  One stock worth watching on a move higher would be IRBT (iRobot Corporation).

iRobot Corporation (iRobot) designs and builds robots. IRobot’s home care robots perform time-consuming domestic chores while its government and industrial robots perform tasks, such as battlefield reconnaissance and bomb disposal, multi-purpose tasks for local police and first responders, and long-endurance oceanic missions. It sells its robots to consumers through a range of distribution channels, including chain stores and other national retailers, and through its on-line store, and to the U.S. military, as well as other government agencies globally.

Please take a look at the 1-year chart of IRBT (iRobot Corporation) below with my added notations:

IRBT has formed an important price level at $30 over the course of this year. After breaking below that key $30 level earlier this month, the stock moved lower as expected. As the market has rallied higher, IRBT has started to make its way back up to the $30 level. If IRBT does make it back to the $30 level, one would expect that the stock would resist that level and most likely move lower again.

The Tale of the Tape: After breaking its key level of $30 earlier this month, IRBT moved considerably lower as expected.  Now that IRBT has started to recover, the $30 level should act as resistance if the stock gets there. From there, IRBT should move lower again, thus a trader would want to enter a short position with a stop above $30. A break back above $30 would negate the forecast for a move lower.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Broadsoft, Inc (NasdaqGM: BSFT)

On the other hand, maybe I was right, the market has started a rally. Wednesday brought a little doubt to my mind, but yesterday seems to have confirmed my belief that a rally of some extent had started on Tuesday.  Thanks to Tuesday and Thursday’s moves, a lot of stocks that I am watching have broken back above key areas of resistance. This should be a sign of higher prices for those stocks, even if those moves are only temporary. One stock of many that I am watching would be BSFT (Broadsoft, Inc).

BroadSoft, Inc. is global provider of software that enables fixed-line, mobile and cable service providers to deliver voice and multimedia services over their Internet protocol-based (IP-based), networks. The company’s software, BroadWorks, enables its service provider customers to provide enterprises and consumers with a range of cloud-based, or hosted, IP multimedia communications, such as hosted IP private branch exchanges (PBXs), video calling, unified communications (UC), collaboration, and converged mobile and fixed-line services.

Please take a look at the 1-year chart of BSFT (Broadsoft, Inc) below with my added notations:

BSFT has what I believe is a key level at $30 (blue). You can see the $30 mark as resistance back in January, support in June, and then back to resistance again over the last couple of weeks. Yesterday BSFT broke back above the $30 level. If the market rally cooperates, BSFT could make its way back up to the $35 area. However, if BSFT cannot hold $30, the stock will probably test new lows for the year.

The Tale of the Tape: After creating an important level at $30, BSFT has broken back above that resistance this week.  BSFT should be moving higher from here, even if only for a while. A long position could be entered at or near $30 with a stop below $30. A break back below $30 would negate the forecast for a move higher and a short position would be advised instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Robbins & Myers (NYSE:RBN)

I thought a market rally might have started on Tuesday, but yesterday’s sell-off seems to have placed that prediction on thin ice for the time being. As I’ve stated repeatedly, no matter how bad we continue to sell-off, the market will eventually rally. My recommendation to all of the traders I coach is to narrow their list of stocks down to the ones that are still within an area where entry levels are identifiable. A stock to consider putting on such a list would be RBN (Robbins & Myers, Inc.)

Robbins & Myers, Inc. is a supplier of engineered equipment and systems for critical applications in global energy, industrial, chemical and pharmaceutical markets. Robbins & Myers operates in three segments: Fluid Management, Process Solutions and Romaco. Fluid Management designs, manufactures and markets equipment and systems used in oil and gas exploration, recovery and transportation, specialty chemical, wastewater treatment and a variety of other industrial applications. Process Solutions designs, manufactures and services glass-lined reactors and storage vessels. Romaco designs, manufactures and markets packaging and secondary processing equipment for the pharmaceutical, healthcare, nutraceutical, food and cosmetic industries.

Please take a look at the 1-year chart of RBN (Robbins & Myers, Inc) below with my added notations:

From January until June, RBN had created a very common chart pattern known as a Rectangle. RBN’s Rectangle consisted of (2) important price levels: The first was the $45 resistance (red) and the other would be the $40 level (green). Always remember, important prices can tend to stick with a stock. So, after rallying higher in June and then pulling back over the last month, RBN has fallen back into its previous Rectangle pattern’s range of $40-45. So far, the previous support of $40 has held the stock again over the past couple of days.

When RBN eventually breaks out of this range again, levels of $50 and $35 (blue) could come back into play for trading opportunities.

The Tale of the Tape: RBN has formed (2) clear levels of importance over the last several months at $45 and $40. A long trade could be entered at the $40 support or on a breakout above $45. Stops should be placed below the level that was entered. However, if RBN were to break its $40 support, a short trade could be entered in expectation of a move lower.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Todays Big Stock: Globe Specialty Metals Inc. (NasdaqGS: GSM)

The markets have dropped drastically over the past several weeks and for a while it seemed like they would never stop dropping. For now, maybe they have. I believe that in all likelihood a rally probably started yesterday. However, if the market has started to move higher, it may be short lived. If you missed out on entering short opportunities when the sell-off started, you may want to look to rallies for a 2nd chance.  One stock worth watching would be GSM (Globe Specialty Metals, Inc).

Globe Specialty Metals, Inc. is a producer of silicon metal and silicon-based alloys. The company operates in six segments: Globe Metallurgical, Inc. (GMI), Globe Metais Industria e Comercio S.A. (Globe Metais), Globe Metales S.A. (Globe Metales), Solsil Inc. (Solsil), Corporate and Other. On April 1, 2010, the Company purchased all of the ownership interests in Core Metals Group Holdings LLC (Core Metals).

Please take a look at the 1-year chart of GSM (Globe Specialty Metals, Inc) below with my added notations:

GSM had formed a major support level at $20 (red) over the course of this year. Unfortunately, GSM broke that $20 level earlier this week and the stock moved lower as expected. When the market does finally rally, GSM could make its way back up to the $20 level. The $20 level was important when GSM was above it and it should be just as important now that GSM is below it.

On any moves lower, it is worth noting that GSM had previous levels at $18 and $16 (green) as well. These levels could provide future entry points for trades if GSM retests those levels.

The Tale of the Tape: After holding $20 as support for the past 6 months, GSM broke down through that $20 level.  When GSM finally moves higher, the $20 level should act as resistance if the stock gets there. From there, GSM should move lower again, thus a trader would might want to enter a short position with a stop above $20. A break back above $20 would negate the forecast for a move lower.

Side note: If GSM were to pull back down to $18 or $16, a short-term long trade could be entered in preparation for a move back up to the $20 resistance.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT

Todays Big Stock: Kinetic Concepts, Inc. Common S (NYSE: KCI)

With the stock market having lost close to 20% in a couple of weeks the perception would be that everything is trending lower. Although I have yet to find any stocks that haven’t had a terrible week or two as of late, I do think there are a few stocks still maintaining an overall trend higher. Stocks that have maintained their trend higher through the current market sell-off will most likely be the ones that rally strongest when the market finally does rally. One such stock that may fit that description would be Kinetic Concepts Inc. (KCI).

Kinetic Concepts, Inc. is a global medical technology company, which is engaged in the discovery, development, manufacture and marketing of therapies and products. Kinetic’s primary business units serve the advanced wound care, regenerative medicine and therapeutic support systems markets. Kinetic operates in three segments: Active Healing Solutions (AHS), LifeCell and Therapeutic Support Systems (TSS).

To review Kinetic Concept’s stock, please take a look at the 1-year chart of KCI (Kinetic Concept, Inc.) below with my added notations:

Although KCI has sold off like all other stocks over the past few weeks, the stock has continued its overall trend higher regardless. After having a rough day yesterday, KCI still managed to hold its level of $60 (green). Obviously, if the market continues to sell-off, KCI may break its $60 level thus paving the way for lower prices for the stock. In the situation where that occurs, $55 would be the next potential level of support (purple) for KCI.

The Tale of the Tape: As hard as it is to believe, KCI is currently still in a trend higher. KCI also has an important level at $60. A long position could be entered at $60 with a stop below $60. If KCI were to break below $60, a trader might want to enter a short position with a stop loss set above $60 expecting a drop down to the next level of $55. Another long trade could be made at the $55 level.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

Good luck!
Christian Tharp, CMT